May 11, 2011, 9:26 AM — A U.S. bankruptcy court in Delaware recently approved Nortel's sale of 666,624 IPv4 addresses to Microsoft for $7.5 million. Despite this precedent, a debate is raging in Internet policy circles about how sales of IPv4 addresses -- particularly the largest blocks of IPv4 address space issued before the Internet became popular -- will proceed in the future.
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On one side of the debate is the American Registry for Internet Numbers (ARIN), the regional Internet registry for North America, which is trying to assert authority over all IPv4 address transfers in the region.
Arguing against ARIN's right to approve all IPv4 address sales in the region are lawyers, entrepreneurs and other experts who say that some IPv4 address holders have the right to sell their IPv4 addresses to whomever they choose without prior approval from ARIN.
The crux of the issue is whether legacy IPv4 address holders -- particularly those that received large blocks of IPv4 address space before ARIN was founded in 1997 and never entered into a legal agreement with ARIN -- must seek ARIN's approval to sell their IPv4 address space.
Nortel was a legacy IPv4 address space holder that never signed a contract with ARIN and didn't seek ARIN's approval to sell its unused address space to the highest bidder. However, the buyer of Nortel's address space, Microsoft, ended up signing a contract with ARIN after the deal was struck.
The bankruptcy court's approval of the Nortel/Microsoft deal is viewed by many as the beginning of a vibrant market for legacy IPv4 address space.
Charles Lee, president of Addrex, a startup that was the sole dealmaker for the Nortel/Microsoft sale, says the judge's ruling in the Nortel case has clear implications for future sales.
"We believe that the recognition of a legacy number block holder's exclusive rights to use, transfer and sell these assets is a watershed moment," Lee says. "It means that the pejorative term 'black market' is a thing of the past, and the creation of an open, legitimate secondary market for the sale of number blocks, under a legal framework, is now undisputed."
However, the Nortel/Microsoft deal didn't follow ARIN's stated IPv4 address transfer policy to the letter, so many observers are questioning how future trades will occur.